it's still pretty darn good and a lot cheaper than it was in 2008 or 2000. i like to say there's a bull market somewhere, i'm jim cramer, i'll see you tomorrow! hey, larry, what do you have for us? >> jimmy, former fed governor, the highly influential governor is here with me tonight exclusively. good evening, i'm larry kudlow, this is the "kudlow report." sizzle story number one, in just a few minutes, i'll have an exclusive live interview with former federal reserve governor, he was a ben bernanke intimate in office, it's his first interview since leaving the fed. we'll talk about the outlook for the american economy and the american experiment. but first up, we're going to sizzle with mitt romney who sizzled in a comeback in michigan and also swept arizona. he snags victory from the jaws of defeat and i think he did it by touting his supply side tax and economic growth plan. we're going to get to our panel in a moment.

but first up, robert costa of the national review with all of the latest h. good evening, bob costa. >> look, mitt romney got the momentum out of michigan, but it's a more complicated story. he split the delegates. 30 delegates in michigan, santorum walks away with 15, romney walks away with 15. so romney got the momentum, he wrote his tax cut, his big speech on friday, into victory in michigan by a couple of points, but in super tuesday, santorum's not out of this hunt. >> what does romney have to do to stay on message? i agree with you that tax cuts and santorum's miserable performance on extreme culture war, i think the tax cuts did it. what does he got to do, bob costa? >> look at what he said last night in his victory speech. it was a speech that really focused on the economy, on electability, that's what he's going back to. he needs to go into ohio and he has an organizational advantage there, but he has to go back to the growth message. can he not only go into ohio but

pivot, compete even down south, tennessee, oklahoma, and georgia, big supertuesday states. the most important thing for romney is to win more states than just massachusetts and vermont because he needs to have a victory like ohio, somewhere else to show that he's really the front runner. >> robert, if santorum had talked tax cuts and growth, and he's got tax cuts, i may not agree with all of them, but he's got a pro-growth plan in there. instead of this extremism on the culture war, he would've won michigan, wouldn't he? he had his chance. >> well, you talk to conservative voters, they want an economic battle, they don't want a culture war. santorum tried to pivot last night in the speech focused on jobs, manufacturing, energy, that's his message this week. can't be about throwing up at jfk and contraception, that's for sure. >> you get the nobel prize for political analysis tonight. now, let's continue this conversation. we have top romney adviser and former minnesota governor tim

pawlenty, jim p-- and i want to to take a quick listen to what romney said last night about the taxes and the economy. >> this president wants to raise your taxes, i'm going to cut them. that's going to start with an across the board 20% rate cut for every american. i'll also repeal the alternative minimum tax and we'll abolish, finally, the death tax. >> all right. now tim pawlenty, welcome back, governor. it's always a pleasure. i want you to tell me, i want you to swear on a stack of bibles that mitt romney is going to continue on a daily basis, 24/7, 24/7 to push the tax cut plan, the entitlement reform, the deficit-cutting plan so america can grow and stay out of bankruptcy. will he do it, tim? is this the new romney campaign? >> larry, have i ever steered you wrong yet? you were telling me there wasn't

going to be a phase two, there's a phase two, it's pro-growth. thor number one issue in michigan was the economy, those voters were also concerned about who's best situated to defeat barack obama and you can set the political rhetoric aside. when you look at how people view these candidates, there is no question that mitt romney has got both in his rhetoric and in the substance his best position to grow jobs and get this economy moving because he's been an entrepreneur, been in the private sector, hasn't spent his whole adult life like rick santorum in washington, d.c. or in government. and yes, he is going to be out talking every day about growing jobs in a pro-growth manner. and that tax proposal's one of the center pieces. >> and governor pawlenty, let me ask you this. the next step it seems to me is to contrast obama's tax hike, the top tax rate will go from 35 to 45%. dividends will go from 15 to 45% under president obama. under mr. romney's plan, the top rate goes from 35% to 28% and on

down the line. capital gains and dividends stay at 15. that contrast, it seems to me, is almost an election definitional contract. will mr. romney make that contract? >> yes, absolutely, larry. there's no question about it. he'll be making it every day. and you know, maybe we won't get into all the details in every speech, but you know the components of that pro-growth, pro-job, pro-economic development platform he's put, it's going to work and it's good. >> most people, larry want to know -- >> you say we won't see all the details. >> no, you do know all the details. listen to me now. you always try to twist my words. if you're sitting at the bar stool, i'm sitting on a bar stool at the end of the vfw in my former meat-packing town of south st. paul, you don't look at the tv screen and say he's got a great form for saving

sarbanes-oxley, you get all of the details. mitt will talk about them and put them out there. but in the end, it comes down to are you going to grow jobs and get this economy moving? the answer from mitt romney is yet. >> i concede the point. i just want to read from the exit polls last night, the two most important issues, the economy, 55% felt the economy was the most important issue. of that group, romney 47%, santorum 29%, the second most important issue, again from the exit polls, the budget deficit, 24%, romney, 48%, santorum, 30%. can santorum possibly compete with romney on the economy? i know santorum tried to pivot last night, chris. but right now from the michigan polls, romney is the prohibitive favorite because he does have that new plan. >> larry, i think for santorum to be competitive he has to be a little less rick santorum and i think romney needs to be a little more mitt romney.

what i mean by that is rick santorum needs to basically say, you know, what i'm the grandson of a coal miner, i have an economic plan that's bold and going to help every working family in america. if he sticks with that and he paints a vision of economic growth and limited government and responsible spending, i think he can be very competitive. with mitt romney, i think he needs to be a little bit more mitt romney and quit with the apology and say he's a little bit like tony robbins, i'm successful and i can make you successful too. it's been my life. both of them, i think, have to be more bold in their embracing of economic issues and because that's what the voters clearly want to hear. and they've both been a little bit timid or distracted at this point. >> jimmy p., were people afraid of rick santorum? did that come out in the vote last night? i'm not here to character attack santorum. i've known him for years. in terms of the jfk church and state, could they throwing up in terms of being against contraception, women in the

military, women in the office, jimmy. is, in fact, santorum has a problem? were people afraid of santorum in last night's michigan election? >> every republican knows that when you mention jfk, the next words out of your mouth have to be tax cuts. you need to talk about jfk tax cuts, not church and state or anything else. i think they saw santorum and started fast forwarding to november in an election that despite the president's doing better, this is a very winnable election. and they imagined a false campaign about abortion, contraceptives, sex, condoms, all that stuff and not about the fact that this president wants to raise taxes by $2 trillion and the debt would get worse despite all those tax hikes. that's what they want the campaign to be about. >> and jimmy p., let me give you a follow-up. i want to flip back to mitt

romney. romney's come back in two important primaries, right? he was down double digits in florida with gingrich and came back and won by double digits. down double digits in michigan and came back and won by five points. is romney the underrated guy in the race? is romney the tougher more resolute? he called himself resolute in the debate. but is he underrated, tougher, and more resolute than anybody gives this guy credit for? can that be said right now as we run up to super tuesday? >> i think early on, there was a little bit, he might have a glass jaw, there was some sort of wimp factor involved. he's taken a punch, hit the mat. he's got back up and when he's getting back up, he's become a better candidate. he's expanded more. he's expanded more on his economic policy. now we have the tax plan. as long as he keeps focusing on that, cut taxes, cut debts, cut government and he'll probably be okay. >> tim pawlenty, one of the things that came out.

came out in the exit polling it's very important. it could go to the obama race. among affluent suburban voters in michigan and east side of michigan and east side of detroit up the river and up the lake and so forth. mitt romney did very well. he may have won the election there. affluent suburban voters. now, this was one of obama's key areas of victory in 2008. is this a big swing that's going on? michigan is going to be a battleground state or possibly? why is your man getting the suburban vote? >> well, one of the things you see out of the demographics from last night in michigan, mitt did very well first amongst republicans, that's important in a republican primary with women, with catholics, with independents and others. and one of the reasons, i think is because of the economic message, part of the swing vote in the general election is going to be suburban voters, particularly suburban women, and one of the things they like about mitt romney is the fact that he has got a sense of getting the country turned around in a pro-growth, pro-jobs

investment, entrepreneurial. and he's got the credibility and experience to back it up. he is not a washington, d.c. politician. most people define the problem -- >> he lost under 100,000, how is he going to appeal to those folks? >> well, he's going to appeal to those folks the same way he did in florida and nevada and other places. people want jobs and the main concern for most everyday americans is am i going to have a job? their pathway to quality of life hinges on that fact. and so the details of maintaining the 15% rate on capital gains and qualified dividends and interest and lowering those rates 20% are very important and we'll be pounding that every day. the net result that most americans are concerned about is are you going to do those things that are going to make it more likely that jobs are going to grow? mitt romney's actually done it, rick santorum has spent his whole life in government. he can't walk the walk, he can only talk the talk and people are sick of that. >> let me give that a chance.

i personally don't think santorum's dead. i think mitt snatched victory from the jaws of defeat. in terms of santorum's plan, in terms of looking at it, i can't find an economist, not a single economist at least who will come on this show and defend the zero tax rate on manufacturing. people say it's pandering, picking winners and losers, it's industrial policy and i wonder how big a weakness you think that is. or is santorum going to move away from that and stick to lower tax rates on individuals and businesses and even it out? >> well, santorum's and romney's economic plans do reflect a vision of a politician in some respects. they do pick winners and lurzs with santorum with manufacturers with, with romney, he picks the $200,000 magical number, which is an arbitrary number. i think good tax policy is neutral, it doesn't incentivize anyone to do anything other than save and invest no matter who you are. but ultimately, gas prices over

$4 a gallon, unemployment's well above 8%, i think the greatest asset of either one of these candidates is they're not going to beat barack obama on election day. >> will the club for growth endorse? or are you going to stay out? >> we'll call balls and strikes on policy that the candidates offer to try to give commentary on whether we think it's pro-growth or not. >> all right, gentlemen, thank you very much. we thank you. coming up on kudlow, did fed head ben bernanke send stocks plunging today by what he didn't say? or did the market misinterpret bernanke? i want to throw that into the mix when we do stock market work. plus, an exclusive live interview with former federal reserve governor and bernanke and kevin warsh, what he has to say about life, liberty, and the pursuit of happiness. free market capitalism always the best path to prosperity. "kudlow report," we'll be right back. i've been riding since i was 17.

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let's do stock market work now. stocks opened hire, 3% gdp rate pretty good, stronger manufacturing data also good. the markets wound up in the red as fed head ben bernanke's speech seemed to spark a stock

slide including gold. let's talk about we've got cnbc chief, former head of fixed income research at bank of america, david goldman is with us. currently president of macro strategy. keith, i want -- can i pose something of a contrary view? i read bernanke's speech, his testimony, i read it carefully. basically i don't think he ruled out any accommodation. in fact, he highlighted operation twist. he operated the zero interest rate and he continued talk about risks to the economy and that hep didn't think unemployment was going lower, keith. maybe it was that pessimism that drove down stocks and gold? >> yeah, i think you're right. i mean, you look -- he's got pessimism, he's got confusion, i mean, look, there are two things this guy has to get right. he has to get growth and inflation right. and in between all of that, he has to assume he gets some level of price stability. he gets the growth expectations wrong, he gets the inflation definition wrong, and every time you talk to him, he talks about

price stability when you're talking about price volatility in markets like we've never seen before. so what i think happened today with the dollar is quite simple. number one, mitt romney is the stability trade, so we've got to get that on the table. and number two, the world is starting to lose faith in ben bernanke having a handle on this thing. and i think this, there's a message in a bottle here politically. i think if mitt romney can figure this out and figure out how to communicate with the american people that ben bernanke's policy to inflate is actually attacked. i think this presidential election is going to be much tighter than what's -- >> i think those are great points. i love your romney dollar point, but i'm just saying -- all this business about no qe-3. stocks may have gone down because bernanke was gloomy. david goldman, on the surface is qe-3, as jimmy rogers pointed out last night, and i'll go to you, we've got qe-3 coming up in europe. the european central bank announced a $700 billion plus to

their banking. and the u.s. ain't exactly tight. so liquidity can't be the problem, dave, could it? >> liquidity isn't the problem, larry, a lot of the stock market rally in 2008 when we went to the brink was liquidity driven as we crunch those numbers, though, the real effect took over with this last rally. starting last october and its real demand from asia and the united states but driven stocks since then. i'm going to give bernanke a big pass but i agree with you. it's not bernanke's fault for this economy's weak because we already have the big-cap profits, what we're missing is a tax cut and regulatory roll back. >> are you buying stocks or selling stocks? >> i'm a buyer for a simple reason. an 8% earnings yield on big caps blows away 2% in treasuries or 2% or 3% on corporate bonds, and the downside is much lower than the chicken little days of the

u.s. sovereign downgrade and the double dip and the chinese hard landing, those stories we sort of forgotten about. >> and keith, are you buying or selling them right now? what's your take? >> selling them. the reality is what you have going on here is very different on a six-month basis versus a one-month basis. the dollar was very strong over a six-month basis. so if you look at what's happened, q-4 gdp reported today i thought was fantastic. that's the kind of economy i want to see. oil dropping, consumption rising. this is very simple. since january the 25th, the u.s. dollar is down 4% and inflation has gone bonkers. consumption slows, gdp will slow, and that's going to be ben bernanke -- >> the economy -- >> except we had a gold price collapse today. that's very good news, the end of the world option's getting cheaper. and that means stability is on the table. >> that's like a four-hour trade. let's get this on the table. every single person in america owns gold. i've owned it since 2003.

today didn't change the game. ben bernanke today didn't change his policy. ben bernanke told you he sees no inflation, he will never see inflation, and he will never raise interest rates. >> keith, all due respect, the way we crunch the numbers, the oil price rise is due to real demand particularly from asia, not monetary policy at this point. >> that doesn't make any sense, the mastercard data at the pump in the u.s. in terms of how many people were buying gas is down 5% year-over-year. something is falling as the intensity of the inflation is rising. >> you're talking about -- >> inflation is attacked. >> the absolute global numbers, the marginal buyer of oil and energy has been asia and the continued asian expansion put the oil at $110 to $120 a barrel on demand alone. >> i think you're looki ining ae wrong estimates. they've gone negative year-over-year. demand in asia has fallen off a cliff. >> that's only -- that's a one-month thing at the end of

the chinese new year. >> let's not get too into the weeds. i want to say this, i think bernanke was gloomy today and i don't think the media is giving that enough credit for driving down stocks. it was only 53 points, but that could be. but keith, i liked your point. i think goldman agrees, if he's on the move, got a good fiscal plan, good growth plan, he's told us he's going to replace bernanke. that could end up being bullish for the dollar and more bullish for stocks because you are right the november election race is going to be a lot closer than people think. >> i know. >> you both agree with that and i want to get you both back. keith, thank you, david goldman, as always. up next on kudlow, probably the biggest democrat of them all is now supporting the keystone pipeline. we're going to tell you who it is when we check headlines after the break. i look at her, and i just want to give her everything.

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three words, dad -- e-trade financial consultants. so i can just go talk to 'em? just walk right in and talk to 'em. dude, those guys are pros. they'll hook you up with a solid plan. they'll -- wa-- wa-- wait a minute. bobby? bobby! what are you doing, man? i'm speed dating! [ male announcer ] get investing advice for your family at e-trade. there's no verdict yet in the trial of alan stanford. joining us from the cnbc newsroom. >> that's right, after deliberating for two hours, jurors in the trial of alleged swindler alan sanford have gone home for the night without a verdict. stanford is tried with defrauding thousands with an alleged $7 billion ponzi scheme. facebook is launching a new advertising platform before it goes public. julia borsten has more.

>> helping marketers induce its own bottom line. they will launch mobile ads, ads on the logout page, offers, and a generator, so they will see stories from brands they care about. walmart and 1-800-flowers are yielding a better roi. the rumored candidate for secretary of treasury or commerce for today was front and center here at facebook presenting these new ad formats, over 1,000 marketers. seema, back over to you. the federal government is now delaying the requirement to have rear view cameras in all autos by 2013. minutes ago, the greek parliament approved cuts to health care this as a european central bank handed out another $700 billion to 800 banks to help recover from the debt crisis. but in an exclusive interview with cnbc maria bartiromo, larry fink, chairman and ceo of

blackrock says it may not be enough. >> this procedure creates an atmosphere in which now the politicians can find ways to stabilizing their deficits and most importantly they have now two to three years to start fixing their economy towards growth. i think what the ecb has given was europe time to fix the problems. this is not a fix, it's a stabilizer. >> and speaking at an energy department conference, former president bill clinton has come out supporting the keystone pipeline. mr. clinton said he was surprised that construction of the pipeline was stalled blaming on transcanada. he says the company could've routed away from controversial areas in the first place. finally tonight, bad news to report, davie jones lead singer of the monkeys has died. he suffered a heart attack at his home in florida. davie jones was 66 years old. larry, the monkeys was

manufactured for tv but syndication rights and music royalties made the monkeys an industry on its own. back to you. >> i liked him very much. thank you ever so much for reporting. coming up on "kudlow" the ultimate fed insider. my exclusive live interview with kevin warsh, it'll be his first interview since leaving the fed a short time ago. we'll talk about the fed, life, liberty, and the pursuit of economic growth. back with more. look at all this stuff for coffee. oh there's tons. french presses, espresso tampers, filters. it can get really complicated. not nearly as complicated as shipping it though. i mean shipping is a hassle. not with priority mail flat rate boxes from the postal service. if it fits it ships, anywhere in the country for a low flat rate. that is easy. best news i've heard all day! i'm soooo amped! i mean not amped. excited. well, sort of amped. really kind of in between.

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welcome back to the "kudlow report." i'm larry kudlow. at the top of this half hour, we'd like to welcome a very special guest to the "kudlow report" and a personal friend. joining me now for an exclusive interview, the highly influential former federal reserve governor kevin warsh, a ben bernanke right hand. he served on the fed board from 2006 to most of 2011. this will be your first interview since leafing the fed. mr. warsh here to talk about the outlook of the american economy. i call it life, liberty, and the pursuit of happiness. he's publicly stated that recent policy activism, measures that go beyond central bank's capacity threaten to forestall

recovery and harm long-term growth. all right. kevin, you said that, but no one could ask you what you meant because you have been done any television yet. that's a clever strategy. but now you've walked into the lion's den, i'm kidding. let me ask you. do you still think -- you were referring to the fed's operation twist and their zero interest rate targets. do you still believe that those will forestall economic growth in the long run if not sooner? >> so, larry, it's good to be on the show. you invited me here a long time ago, i said i'd do it by leap day, i've done it today. with respect to the policy activism, larry, you know my judgments. i think it's fiscal policies that should be permanent. it's monetary policies that should be temporary. and when central bankers project interest rates at these exceptionally low levels for several years, they could be constraining themselves and that could invite problems. >> so you did not dissent, but you were an insider, kind of operating. some people have reported to me that you actually held back that

we might have had several trillion dollars if qe -- i know you don't want to go there. what i want to know is right now, where are you on the economy? bernanke was very gloomy today on the economy. i think the geniuses in the media completely misinterpreted what he said and i think the stock market therefore fell. are you as gloomy as ben on the economy? or are things looking up from the data points? >> so a couple of things, larry. first off, i think that the chairman's testimony today did not seem to be dramatically different from the messages he gave a few weeks ago in his press conference. i didn't view him as trying to influence markets or change market expectations. but this wouldn't be the first time that markets tried to get ahead of policy. to the extent they were looking for a qe-3 signal today more explicit, they didn't get it. perhaps the reason for the disappointment. all in all, my sense of the federal reserve is they don't take a lot of encouragement from the incoming data. they don't think the incoming data is likely to carry through the balance of this year. my own take on the economy is a little stronger than that.

i'm reasonably encouraged, ui claims are quite low, economic growth appears now to be running at a level above where we saw it in most of 2011. it wouldn't surprise me if the first quarter looked something like the fourth quarter of last year, 3% range. >> and for the whole year, 3%. >> it's hard to know. it's hard to know. but my own sense is the economy has some real traction, real momentum. but the ultimate decision on monetary policy shouldn't be my forecast versus the chairman's forecast or anyone else's. i think my own view is we should have a lot of humility about these forecasts. >> i think one of the points you're making is, the zero interest rate policy now let's say forecasted until 2014, actually is ruining the risk thermostat or the risk barometer. how do you know risk if the fed is artificially holding down rates? and does that worry you long-term that mistakes will be made, there's too much money, people aren't assessing risks properly and the fed shouldn't

have gone there? would you have preferred them not to have the zero interest rate this long? >> my judgment, larry, and this will be no surprise to you, my judgment is that we don't know what the economy's going to look like next year, we don't know what the economy's going to look like thereafter. the chairman tried to say today that any forecast, any commitments they make have to be data dependent. i think he tried to put a little extra burden on the incoming data that will happen before his march meeting and his april meeting. i'm not sure there's a huge gulf, but my own judgment says when central banks try to influence long-term interest rates, central banks in general try to push people from risk-free assets to risky assets, we don't know as market participants what the underlying fundamental values would be and trying to influence the ten-year and 30-year treasury rate, this is going to be tough. >> it's the basis of the marketplace, everybody operating off those treasury rates. if you finagle those.

>> the federal reserve probably feels as though they are the only game in town. the rest of washington doesn't seem that interested in doing policy good, bad, or indifferent for 2012. it may be they're trying to compensate for the failings of other policies. i don't think that's their objective or the right thing to do and i think the chairman is going to see what the data happens to be over the course of the next several months. >> i want to get to fiscal policy. one last quick one on the fed. does the dollar play a role in the fed's deliberations and policies? >> i would say the value of the dollar should play a pretty central role in any central banker's deliberations. i'd say there's to be a fair a genuine difference of opinion around that table at least back in my day about whether a stable dollar would be useful, about whether a stronger, weaker dollar would be helping. >> the commodity price role including gold. it sounds like that no, kevin warsh. >> i can give you my own best

judgment. >> that's what i want. >> my own best judgment is the dollar is the world's reserve currency. it plays a huge benefit to the u.s. economy. we've got to earn that right and the way to earn that right is to make sure that we have an economic policy that's strong and performing and we have institutions that make economic policy. >> let's go to washington for a minute. a friend of yours and a friend of mine budget chairman paul ryan. he's talked about a growing risk of debt bomb from bankrupt entitlements, most particularly medicaid, medicare. a debt bomb that's going to lead to a huge tax rate increase bomb that is going to doom us to european-style economic stagnation. your thought? >> so the central bank went in front of congress today. my own view is congress needs to hear what their homework assignment is. and their homework assignment

should be about addressing these debt and deficit issues before it's too late. market participants should be able to look at market prices and get a sense of whether markets are getting uncomfortable with funding the u.s. government. that's more difficult to do when the federal reserve is buying at the long end of the curve. >> are they essentially bankrolling bankruptcy? >> i don't think it's their objective or intent, but i do think central bank activism makes it more difficult for members of congress, market participants to see when we get close to that tipping point. it's more important now than ever that congress take this matter into their own hands, offer constance to the economy. and punting them is a risk. >> and could be a credit ratings risk. >> we've been following the events in europe. some years ago you would have said to talk about sovereign debt crises anywhere in the world was crazy, was ludicrous,

would never happen. we should be paying attention to what's happening to risk-free rates everywhere around the world. and we should take notice and take action sooner rather than later. >> what's your take about the impact on growth? of certain political incumbents who have adopted a rather left populist view that taxing the rich is necessary for america. how does that affect growth? you're in the private sector. you're talking to business people men and women now. how is this populism going to play in the economy? >> i don't do politics, larry. >> i left it as a generic question. i'm not pointing any fingers at all. sometimes republicans are just as dead as democrats, not always. >> i'd say we've got two big challenges. >> let me put it more bluntly. if paul ryan is right, if we cannot curb our spending and our entitlements and we cannot curb our deficits and debts, then we are going to have hugely larger tax rates no matter who's in the white house. what's that going to do to the economy?

>> it's absolutely true. if we continue to run unsustainable deficits, there will be a rude awakening. the dollar at the world's reserve currency will lose its status. we do have an opportunity. we've got an opportunity in 2012 and probably 2013 to take these actions. i think with respect to higher tax rates which are now threatened for 2013, for a brand new congress who we're going to have a huge burden -- >> the personal system imploeds, corporate system implodes, could be the largest tax hike in history. >> so i think the risk is much of what the central bank in the u.s. has been doing has been pushing people into riskier assets, the assets have moved up in value. there have been income and wealth effects. if we get into the third and fourth quarter of this year and market participants continue to see that tax rates are going up for dividends, capital, income earners of all sorts, we're likely to see that impact in the capital market. seeing the stock market -- >> a run from risk. >> and that's not going to be good -- >> no matter what the fed does,

there's a run from fiscal problems. is that fair? >> it's fair in that the federal reserve is powerful, but we cannot stop the underlying assets from finding their true value, and we're going to run into a lot of trouble if we try. >> as the meter goes, as the great economic meter in the sky goes, are we moving towards free market incentives for growth, or are we moving away from free market incentives of growth? you spent a while in washington, you operate the senior level of the white house, then the federal reserve board itself, growth or no growth? free market incentives or no free market incentives? last question. >> we haven't tried a pro-growth experiment in economic policy for several years and we are suffering the consequences of it. it's not democrat or republican, we need pro-growth policies that are not focused on the next quarter or next election year but beyond the horizon. when our politicians do that, we're going to find more revenue coming into the government, smaller deficits, and an economy that grows and creates the kind of employment that ben bernanke was worried about today.

>> you're worried? >> i think i'm worried, but i'd say there's still a window of opportunity for action to be taken. >> did i give you enough time? you told me before this interview you wanted enough time. you didn't want to do a typical three-minute -- did i give you enough time to get your ideas on the table? >> i think you're treating me pretty well. >> i'll come back. but the most important to leave you and your viewers with, the view, there is a window and there's a real opportunity for this economy to be strong again. and if we keep treating it as a fragile economy, that's what it'll turn out to be. >> free market capitalism is the best path to prosperity. many, many thanks to kevin warsh. next up on kudlow, breaking news coming into cnbc, a state of emergency declared in missouri. violence, deadly tornadoes pound the nation's heartland killing at least nine. we're going to go live to branson, missouri, right next. please stay with us.

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i heard they found energy here. it's good. we need the jobs. [customer:] we need to protect the environment. [worker:] we could do both. is that possible? [announcer:] at conocophillips, we're helping power america's economy with cleaner, affordable natural gas. more jobs. less emissions. a good answer for everyone. well, if it's cleaner and affordable. as long as we keep these safe. there you go. thanks. [announcer:] conocophillips. a state of emergency has been declared in missouri. at least nine people are now confirmed dead after a strong line of tornadoes ripped through the midsection of the country. hundreds of homes have been destroyed. mike bettes of the weather channel is standing by live in branson, missouri. good evening, mike. what can you tell us?

>> reporter: yeah, good evening to you, larry. we can now confirm ten fatalities across the midwest from storms that ripped through overnight and through the day today here in branson. it's known as the live music show capital of the world. and it's been hard hit by an ef-2 tornado, winds as high as 130 miles per hour. a lot of debris strewn about and behind me, you can see the power crews are working through the night to get power restored to this area. this is what's known as branson's strip behind me. it's highway 76. it's where all the tourists would come. and during the high season, this is not the high season, there'd be as many as 70,000 people in this town. the normal number of residents is about 10,000. but you can see the heavy machinery is here. they're trying to clear out some parking lots here. this is the mall in branson, and behind me there, you can see the flashing red and blue lights. they've barricaded a strip here to make sure no people come down this way and that the power crews can restore power as quickly as possible. this tornado was on the ground for 22 miles.

it was 400 yards wide and we spoke with the governor, jay nixon, him saying about three dozen injuries in this town, but luckily no fatalities. and he says this. it may be the joplin effect. we all recall the devastating tornado last year in missouri. people very attuned to the weather here now and knowing what to do at the right time may be saving lives. and the mayor here saying that the welcome mat is open, larry. they thrive on tourism here to really build the economy. she says as soon as they clean everything up, the tourists are welcome back into town. >> mike, regarding the fatalities, look, a lot of people believe the tornadoes come in the very early morning, the predawn. now were people warned these tornadoes were coming? >> reporter: with this particular tornado, they did have warning. and the crediting that for saving a lot of lives. but if you go up toward the st. louis area in harrisburg, illinois, they did not have warning on a tornado that happened so quickly and we know that had a devastating effect on

that community. a very strong tornado, ef-4. it's always good to be prepared regardless of the conditions. we always recommend you have a weather radio. it'll alert you of the danger even in the middle of the night. >> many thanks to mike bettes of the weather channel. north korea surprises the world by announcing a nuclear moratorium? huh? supposedly in exchange for food guarantees by the united states. you know, folks, we've seen this movie before. it always has a bad ending. it never works, you can't trust them, but we're going to talk about with four-star general right after the break.

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north korea announced a nuclear moratorium of some kind supposedly in exchange for food guarantees from the united states. we've seen this movie before. it never seems to end well. in just a moment we'll talk with four-star general barry mccaffrey. but let's go to nbc news white house correspondent kristen welker live from the white house. kristen, what exactly is team obama doing here? >> reporter: hi, larry. well, the obama administration has pledged 240,000 metric tons of food aid to north career, things like biscuits, nutritional supplements. they say this is not a quid pro

quo. it comes at the same time north korea says it will suspend the nuclear weapons test and will allow inspectors. so certainly a big announcement. you're skeptical, secretary of state hillary clinton also skeptical. she says this is a step in the right direction, an important first step. however, they are watching this situation quite closely. as you know, north korea right now has a new leader kim jong-un, very young, a man in his 20s, very little is known about him. and in the past, north korea has reneged on promises of this sort. so the obama administration certainly saying that this is an encouraging first step, but they are not celebrating just yet because they think there's a long way to go and they want to see action from north korea, larry. >> thank you very much from the white house. here to break it all down, distinguished four-star army general barry mccaffrey. as always, sir, welcome back.

down through the years, the inspectors never get to inspect. why should we be aparty to this again? is there any change here? >> well, of course, the history as you say, larry, leads to cynicism. we've been around this circuit a dozen times at least with these people. they did one thing that was encouraging. we got a new leader up there. they were issuing the same blood-thirsty bellicose threats as of yesterday, and yet behind the scenes we met with the north koreans in beijing and hammered out the beginnings of reigniting the six-power talks. that's got to be good. and sending 240,000 metric tons of food up there, certainly a good opening gesture may be to get them to talk about stop long-range missile tests, stop processing uranium, stop your threats to the south. we'll have to see. again, we ought to be cautious.

the only good thing about this is the new leader is taking a risk even doing -- going this far. >> but general, okay, hope springs eternal, i get that. but we know that the north koreans are so hungry they're eating the bark off the trees, we've known that for quite some time. i guess my question to you is why would we give the food delivery first before we get any kind of inspections, atomic bomb, nuclear bomb inspections. seems we always put the cart before the horse, the inspections never happen and america looks weak. we're going into the six-power talksme talksme talks. isn't it premature to send food? >> we stopped the food aid program as you know in 2009. larry, i, again, i would agree. we ought to be very skeptical of this. they've got as many as eight nuclear devices. they've tested them twice in 2006 and i guess 2009. didn't work very well, but it's hard for me to imagine that they're going to give up that

one lever. and nor are they doing this, by the way, this food aid. these people callously starve to death a million people in the '90s. i think we are seeing a signal of sorts this new 28-year-old supreme leader at least is opening dialogue as opposed to bombarding the south korean navy or south korean islands. >> i mean, you've got senator jon kyl, a respected guy in foreign affairs. he says this agreement if there is an agreement, food for inspection or food for moratorium under inspection. he says it violates long-standing u.s. policy not delaying the commitments to food aid. he says the policy was reaffirmed, let's see, in february of this year by the deputy secretary of state and in october 2011 letter last year. so this kind of move, don't they have to come to congress? don't they have to hold hearings. don't they have to have the

power -- the six power talks? we have to talk to south korea, japan, india, whomever. aren't we getting a little ahead of the game? i guess that's what i'm asking, sir. >> probably not. senator kyl i would agree, by the way, one of the great man, statesmen of our time. he's got a long memory in the history of dealing with the north koreans and it's not a good one. dangerous people. a giant million man army. north korea is a slave state. they've got 250,000 people in the concentration camps. the place is bizarre and brutal. i've got to say this is good diplomacy on the part of secretary clinton and we've got the president going, by the way, to seoul in march for nuclear summit discussions. but if we can get the six-power talks going again, maybe we'll eventually stop their uranium enrichment program and they'll say where they are with nukes that may or may not work. >> you know, just the last 20

seconds. totalitarian repressive dictatorship. as you say they're killing innocent people. can we ever believe them, general? can we believe them as long as they're there? >> no, but you know, we're back to the reagan thing. trust and verify. at some point if we get the iaea, the international group back on the ground, with scientists hanging around their facilities, it's going to be better. >> thank you, sir. trust, but verify. we'll see you tomorrow night. mbr told me i have an irregular heartbeat, and that it put me at 5-times greater risk of a stroke. i was worried. i worried about my wife, and my family. bill has the most common type of atrial fibrillation, or afib. it's not caused by a heart valve problem. he was taking warfarin, but i've put him on pradaxa instead.

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